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'Act East' through Northeast: A Challenge for India's Neighbourhood PolicySubir Bhaumik, a former BBC Correspondent and Oxford University Fellow, is the author of three well-acclaimed books on India’s Northeast and the neighbourhood.

21/02/2017

Narendra Modi's 'Act East' through the Northeast is a bold move to situate the country's long-troubled far frontier region at the heart of the country's geo-economic outreach into South-east and East Asia, whose Tiger economies provide one of the best long-term option for India’s economic future.

‘Act East’ grew out of ‘Look East’, a policy dating back to P. V. Narasimha Rao, India’s first reform-driven Prime Minister. But ‘Look East’ did not have a land variant, until Myanmar joined the ASEAN and began to change slowly from a repressive closed military dictatorship to a fledgling democracy, albeit with severe limitations.

But even after the Indian government developed interest in using the Northeast to link up to South-east and East Asia, it has got little purchase from the captains of Indian trade and commerce. The uncertain land route through the Northeast is still seen as much less cost-effective (in pure logistical terms) than the sea routes from India’s east coast. And operating through an insurgency-ravaged frontier region, where physical security and political uncertainty are always critical issues does not generate much enthusiasm among exporters or importers for understandable reasons.

India’s Northeast hangs on to the nation’s mainland through the tenuous 22-kilometre wide Siliguri Corridor (also called ‘Chicken Neck’) and in the event of an all-out war with China, the region will not be able to defend itself, especially if China’s quick-reaction military formations move through Upper Burma and Nepal in swift enveloping pincer movements.

Security concerns are thus paramount and the Northeast has long been seen in Delhi through that prism. To now seek the future development of the region (and its ultimate integration into India) by using it as India’s outpost for its South-east and East Asian outreach is an imaginative move that could generate local economic growth, undermine the roots of the separatist insurgency and generate the hitherto-absent stake in the national economy and polity for the battling ethnicities of Northeast.

Modi’s government – and Manmohan’s before it – have prioritized developing local infrastructure. During the last three years, work on this has speeded up. For instance, broad gauge conversions of crucial railway tracks have been completed after proceeding slowly for a decade. But ‘Act East’ will not deliver if Delhi is not clear on some aspects of the policy.

Northeast India has to be turned into a manufacturing base and it must be integrated into Modi’s ‘Make in India’ policy. It has many critical resources like hydrocarbons, hydel power, even critical minerals like uranium. Now Geological Survey is certain Nagaland has diamonds and precious stones, also found in the neighbouring Kachin province of Myanmar. Indian business, despite the best of roads and railways, airports and waterways, will be unwilling to use the Northeast as a shipment corridor. So, only goods (and services) produced in the Northeast can be exported from the region to neighbouring countries like Bangladesh and Myanmar and beyond. The region’s huge biodiversity makes it an ideal zone for developing captive plantations and traditional medicine producers based on them. There is a huge market for Indian traditional medicines in South-east Asia and China. [The author’s Chinese friends keep asking for head-cooling Brahmi oil and much else, having checked them out on the Internet!] Kolkata-based Centre for Studies in International Relations and Development (CSIRD), which studies regional cooperation closely, has put together a report on products in India’s East with ready market demand in South-east Asia and China. If China started using Yunnan as its ‘southern bridgehead’ to South and South-east Asia, it first developed the huge province and those around it under its ambitious “Western Development” strategy.

India will have to politically resolve the festering insurgencies in the Northeast. It would be impossible to develop arteries for regional commerce through a region where violence and blockades are the rule rather than the exceptions. The recent two-month long road blockade in Manipur is a case in point. If the Kohima-Imphal highway is cut off by such blockades, how can trade and commerce through Manipur (as planned by Delhi and evident in the development of the Tamu-Mandalay highway) work seamlessly? Indian intelligence developed a strategy of wearing down insurgencies through long-drawn negotiations. The time has come to resolve them within a time frame that matches completion of regional transport infrastructure that India is developing to make ‘Act East’ a reality. The progress on the much-anticipated Naga peace process, even after the signing of the ‘Framework Agreement’ in 2015, has been less than promising.

Bangladesh is critical to the success of India’s ‘Act East’ and has so far delivered on India’s security and connectivity concerns. Restoration of India’s pre-partition transport and economic linkages through East Bengal (now Bangladesh) is critical to integrate the Northeast into the country’s mainland. So, India needs to pay back the present regime in Dhaka – by signing river water sharing agreements (beginning with Teesta); by hiking transit rates (now that Dhaka has allowed its territory to be used for transit to Northeast from the Indian mainland) to make income from the source, a critical part of Bangladesh’s economy; and by lavishing development assistance (Delhi is considering a $4 billion Line of Credit after having given $3 billion already). Bangladesh like India is a ballot box democracy, susceptible to outbursts of populism and unless the pro-Indian regime of Sheikh Hasina can flaunt obvious benefits accruing to the country by its improved relations with India, her return to power in January 2019 polls becomes uncertain. Doing enough for friendly governments like Hasina’s is one sure way of developing enough stakes in the neighbourhood. Manmohan Singh’s urge to our neighbours to become a stakeholder in India’s growth story holds true at all times.

Since Myanmar is India’s ‘land bridge’ to South-east and East Asia and is now in a critical phase of political transition and economic opening-up, Delhi will have to play a visible role in the Pagoda nation. Instead of trying to play catch-up with the Chinese who are deeply entrenched in Myanmar since the 1990s, India should leverage its own strengths to develop a presence that will help Delhi get the Myanmarese to address India’s security and connectivity concerns, like it has happened in Bangladesh. Myanmar watcher, Bertil Lintner says India, with all its limitations, is the ideal role model for Myanmar’s fledgling democracy, as it seeks to develop institutions that will sustain it. [After the author’s recent involvement in a recent project to train Burmese lawmakers in media handling, he realized how much was there for us to share.] From helping develop her stock market to software-driven e-governance to building democratic institutions to education, there is so much Indian companies and consultants can do in Myanmar – and are not doing. That must change. Myanmar, like the Northeast, must no longer be seen only through the security prism, if ‘Act East’ has to pick up. Traditional security considerations drive national policy defensive, sometimes needlessly. Engagement, not the lack of it, is the sign of national confidence – and that seems to be lacking in India’s neighbourhood policy. Quiet engagement at multiple levels, not military braggadocio (as during India’s 2015 trans-border raid in Myanmar) is needed.

Tapping the markets of south-western and western China should be part of the ‘Act East’ drive. If that does not happen, Indian industry (or foreign investors) would be less than willing to get into Northeast India to set up manufacturing. Since much of South-east Asia is more accessible by sea, relocation of Indian (and foreign) capital into Northeast is possible only if the Chinese market is accessible. There are understandable concerns of possible Chinese dumping in opening out transport corridors like the Old Stillwell Road – but a way has to be found to access the Chinese markets. Chinese goods are flowing into India’s Northeast through multiple points – at Moreh’s Namphalong market; even Assam Rifles trucks can be seen loading up Chinese blankets and much else. Locals use Chinese motorcycles to ferry Indian traders at the muddy Pangshau pass during weekly markets. But Indian goods, like our Ayurvedic medicines, in much demand in China are not flowing to Yunnan. Even Assam’s thick liquor tea is now in demand as young Chinese learn to drink creamy milk tea. China does not refer to Sikkim as “illegally occupied” by India as it once did after trade resumed through Nathu La. If China trades with India through Stillwell Road (which passes through Arunachal Pradesh, clearly in India), will it not dilute China’s claims to what it calls ‘southern Tibet’!

With South Asian Association for Regional Cooperation (SAARC) in shambles and India involved in a host of regional forums like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), BCIM (Bangladesh-China-India-Myanmar) and BBIN (Bangladesh-Bhutan-India-Nepal), it is time to develop a clear policy on how to go about these forums for advancing national strategic and economic interests. Since even friendly neighbours like Bangladesh are keen to leverage BCIM and BIMSTEC, India’s usual slow-pedalling will work to the country’s disadvantage. Without a clear policy on the three Bs – BCIM, BIMSTEC and BBIN – India’s ‘Act East’ may not really take off. Modi’s PMO (Prime Minister’s Office) may consider a special cell to implement ‘Act East’ that will coordinate with relevant ministries to coordinate strategic projects.